BBM - All posts tagged BBM

To the speculation over BlackBerry’s (BBRY) take-out value, you can add this morning the thoughts of Oppenheimer & Co.’s Andrew Uerkwitz, who reiterates a “Perform” rating on the shares after meeting with CFO James Yersh, writing that he thinks ”there is potential interest in Blackberry as a target but do not expect anything immediate.”

Years, he writes, stuck to the formal statement made Wednesday night, denying any talks with Samsung Electronics (005930KS), contrary to a Reuters report.

But in addition, “management said it has plenty of liquidity, is steadfast in its execution of the strategy, but spoke of the value of its assets (expertise in security and IP).”

The company emphasizes the options open to it, writes Uerkwitz:

Mgmt touted the early success of turning around the company and highlighted it is finally in a position that it can afford multiple options to success. Hardware, for example: if segment break-even isn’t reached by FY16, there are several potentially accretive strategic alternatives (most OpEx is hardware-centric).

Management also reiterated an intention to double software revenue to half a billion dollars, “by growing QNX (majority of current base revenue, growth from connected cars) and converting the low-hanging fruit (roughly 10M users of 40M) to BES12 with monthly ARPU ranging from $0.75 to $6.00.”

Although Uerkwitz writes that he’s “cautious,” but like several other analysts lately, “We believe hardware could bottom in Feb. quarter as BBRY completes the product transition.”

BlackBerry shares are up 4 cents, or half a percent, at $10.15, in early trading.

Oppenheimer & Co.’s Ittai Kidron today raised his rating on shares of BlackBerry (BBRY) to “Perform” from Underperform, writing that the company still faces “a tough and long road ahead” and may yet see “poor results and missed milestones,” but that “the hard reality has sunk in with investors” and the stock is easier to justify near $7 per share.

BlackBerry stock today is up a penny at $7.29.

Management has “done a good job cutting expenses,” writes Kidron, and the sum of the parts suggests the cash of $1.96 per share can be complemented by about $2 per share for the company’s intellectual property, and $1 per share for QNX, and perhaps $2 per share for the combination of the enterprise software business and the messaging franchise BBM.

Add to that, he writes, that expectations are now more reasonable:

We believe reality has sunk in with investors who are now more negativity biased for lost momentum with carriers, a services sales gap and unknown turnaround time-frame. But with this now better reflected in the stock, it’s difficult to see incremental NT data that could significantly worsen sentiment.

While BlackBerry’s no longer a device first company, we’re getting into a tricky timeframe regarding modeling devices. With channel inventory already getting closer to normal, channel fill from new product introductions, such as the Z3 near term, Q20 Blackberry Classic in Nov. and potentially others could temporarily prop up vol. and device sales.

The shares got one upgrade today, from Needham & Co.’s Charlie Wolf, and two downgrades from Credit Suisse’s Kulbinder Garcha, and one from Evercore Partner’s Mark McKechnie.

Needham’s Wolf, raising his rating to Hold from Underperform, cites two reasons for optimism: “First, John Chen, the new CEO, seems to have brought adult supervision to the company. Second, we see potential for a meaningful upgrade cycle in the company’s installed base later this year when BlackBerry introduces its new ‘Classic’ business smartphone.”

Wolf notes BlackBerry is trying to go back to its roots, to an extent, under Chen, though it faces an uphill battle given progress from Apple (AAPL) and Samsung Electronics (005930KS):

With Foxconn as its contract manufacturer, BlackBerry will introduce the “Jakarta”, a 5-inch all-touch device, in the first quarter. Jakarta will initially focus on consumers in Indonesia, a traditional BlackBerry stronghold. BlackBerry will also go back to its roots and introduce the BlackBerry “Classic”, a smartphone with a physical keyboard that includes all of the features, such as “Menu”, “Back’”, “Send” and “End” that were omitted from the Q10, introduced a year ago. The Classic will target regulated industries and security-conscious organizations in the enterprise market. Finally, BlackBerry will introduce the new eBBM Suite, which claims to have the most secure instant messaging service in the industry. The service will also be available to iOS and Android users for an unannounced monthly per-user fee. When all is said and done, BlackBerry seems to be returning to the strategy that brought the company success in 2010-2011. Unfortunately, as BlackBerry discovered a year ago, the world has changed since then. While BlackBerry has been recertified by the Defense Department, the U.S. Air Force recently announced that it was swapping out 5,000 BlackBerry devices for Apple’s iPhone and iPad.1 And while the super security of BlackBerry’s network might appeal to some iPhone users, Apple has made significant strides to beef up the security and manageability of the iPhone and iPad in businesses and the education market.

More important to Wolf, “sales do not have to rise that much to eliminate current losses.”

Operating expenses are currently running less than one billion dollars per quarter. Sales of five million Classics at a $500 price point and 20% gross margin would generate $500 million in gross profits, covering a material portion of BlackBerry’s operating expenses. The number of current BlackBerry users in the business market that are likely to upgrade should exceed this number. However, we do not anticipate that a meaningful number of iOS or Android users are likely to switch. So an upgrade cycle is unlikely to persist beyond a few quarters.

Evercore’s McKechnie, cutting his rating to Underweight from Equal Weight, writes that “BBRY is doing all the right things, but we argue it’s 2-3 years late, BBRY’s services business is unfixable versus increased competition, and handsets will struggle to achieve profitability.”

Our LT EPS power calculation assumes BBRY remains a niche player in which its services business is dependent solely on BBRY handsets for a residual mix to the high-security “die hard” markets. We see a much broader opportunity in services should BBRY navigate towards an open services platform that supports iOS and Android. At this point, however, we see truly independent MDM players such as AirWatch, Citrix‟s Zenprise, Mobile Iron and Good as continued threats to BBRY‟s remaining installed base.

Garcha at Credit Suisse, cutting the stock to Underperform from Neutral, with a $6 price target, down from $7, writes that “We expect net cash of $620mn/$377mn by the end of FY15/FY16 and believe that the cash balance is sufficient to keep BlackBerry operational for at least 3 years, buying time for a turnaround,” but that “Our concern remains that the declining subscriber base and ARPU trends coupled with secular hardware issues means that the services stream will see pressure for some time.”

“We see services revenue declining from $4.0bn in FY13 to $1.5bn in FY15. The challenge, we believe, is to grow MDM revenues in what is a crowded market and believe visibility on a revenue recovery remains low.”

Those three weren’t the only ones offering fresh assessments this morning:

Mike Walkley, Canaccord Genuity: Reiterates a Hold rating, but raises his price target to $8 from $6. “Consistent with our global surveys indicating very weak BB10 and legacy BB7 devices sales, BlackBerry reported soft February quarter results [...] We increase our price target to $8.00 based on our updated sum-of-parts analysis. [...] With respect to BlackBerry’s hardware business, we struggle to assign any value to this segment given our belief that despite the recent Foxconn partnership, it will remain difficult for BlackBerry to maintain a profitable hardware business as a sub-scale smartphone supplier versus larger global OEMs Apple and Samsung and a very large group of price-aggressive Chinese Android OEMs. For the Services business, we assign BlackBerry’s consumer services revenue stream no terminal value and await more clarity around other monetization plans for its declining customer base. In fact, we estimate total subscribers declined from 58M to 53M during Q4/F2014 with roughly 11M of the subscribers enterprise based. Given its sizable installed base behind corporate fire-walls, we believe BlackBerry’s BES and NOC architecture and recurring enterprise revenue stream are BlackBerry’s key strategic assets. We assign a sustainable monthly services ARPU for BlackBerry’s 11M enterprise subs at $3-$4 or roughly $460M in sustainable annual enterprise services revenue. Assuming a 50% long- term retention rate and 65% operating margins, we value this revenue stream at roughly 8x operating income resulting in a valuation of roughly $1.25B. We maintain our prior valuation of BlackBerry’s IP at $1B, or much closer to the $1.4B in intangible assets now on BlackBerry’s balance sheet. We value BlackBerry’s BBM business comprising of roughly 85M monthly active users (MAU) at $750M using a $9/MAU. We believe this per user metric is comparable to recent acquisitions and minority stake investments for messaging platforms such as Viber and Tango in the mobile messaging space. Based on our modeling assumptions, we estimate BlackBerry will have roughly $1B in net cash after it receives a $400M tax refund offset by ongoing use of cash for operations when it potentially achieves cash flow break-even levels in F2016. Finally, we value QNX at roughly $300M.”

Scott Thompson, FBR & Co.: Reiterates a Market Perform rating, and a $10 price tarot. “in our view, the results made clear that a more robust recovery may still take a considerable amount of time […] On the positive side, BlackBerry managed to keep costs in check, improving its GM to 43.1% vs. our 33.1% estimate and the consensus outlook of 34.9%. In addition, the company’s goal of reducing opex by half the F1Q14 $1.2B run-rate was achieved a quarter ahead of schedule, and OM improved to (16)% vs. consensus (38.6)% as a result […] We believe the more profitable services business will continue to be increasingly relevant. We do not expect, however, a significant impact from this change in strategic change to fuel growth and consolidate the turnaround any time before 2H14.”

William Power, R.W. Baird: Reiterates a Neutral rating, and raises his price target to $8 from $7. He trimmed his fiscal ’15 estimates to $3.4 billion in revenue from $3.6 billion previously, while trimming his net loss estimate to $1.62 from $1.95. “We are positive on the company’s cost containment efforts and forecast to moderate cash burn, though revenue remains under pressure. The ability to transition to a sustainably profitable software & services entity remains unclear […] Though just 7% of revenue today, BBRY believes that its software and services revenue, driven by BBM, QNX and MDM, can be the key revenue driver in the future. -BES12. BES12, which is expected to become available in the November time frame, may help stabilize the services business with stronger mobile device management capabilities and better backwards compatibility than BB10. -BBM. BBM monthly average users climbed 5 million sequentially to 85 million, which BBRY hopes to be able to monetize in the future.”

Shares of BlackBerry (BBRY) are down 33 cents, or almost 4%, at $8.72, reversing earlier gains, after the company this morning missed analysts’ revenue estimates for its fiscal Q4 ended in February, but delivered a smaller-than-expected loss per share and said it is focused on getting to break-even on a cash flow basis by the end of the fiscal year starting this month, after burning through $533 million last quarter.

Sales in the quarter of $976 million fell short of the average $1.1 billion estimate on the Street, while the net loss of 8 cents was a lot better than consensus for a 55-cent loss per share.

CEO John Chen went on CNBC and Bloomberg following the report to discuss his focus on staffing up sales and engineering to support the roll out of new hardware later this year. BlackBerry is betting on a couple new handsets, “Jakarta,” or “Z3,” for the Indonesia market, and a new version of its top-tier phone known as the “Q20,” along with an update to its BES enterprise software, “BES 12,” as I reported last month during the company’s presentation at Mobile World Congress.

R.W. Baird’s William Power, reiterating a Neutral rating, and a $7 price target, cites “strong cost control” in the company’s beat on the bottom line, noting BlackBerry reduced operating expense spend by 30%. He also notes the cash burn was $300 million less than the prior quarter, but the revenue was “weak” as a result of pressure on both hardware and services sales.

Sales of 1.3 million handsets was below Power’s estimate for 1.7 million, and what he cites as the 1.8 million consensus.

Power notes the company’s betting on software and services, not hardware, to turn things around:

BBM monthly average users climbed 5 million sequentially to 85 million, which BBRY hopes to be able to monetize in the future. Though just 7% of revenue today, BBRY believes that its software and services revenue, driven by BBM, QNX and MDM, can be the key revenue driver in the future.

“The ability to meaningfully narrow BBRY’s losses via cost management while shoring up cash flow for more of the daunting parts of the strategic transition that lie ahead should resonate with investors.”

Regarding the hardware shortfall, Arcuri writes “BB10 smartphone demand continues to be almost non- existent,” with 67% of actual sell-through in the quarter being for the older, BlackBerry 7 OS models.

Arcuri estimates subscribers declined by 4 million in the quarter:

Service revenue declined ~14% q/q and ~43% y/y, to ~$546MM, in-line with our expectations. The company did not disclose subscriber base metrics in its FQ4:14 earnings release, but we estimate the Service installed base contracted by ~4MM q/q, to ~58MM, with ASPs now in the low $3/month range.

Jefferies & Co.’s Peter Misek was on CNBC a short while ago. He has a Hold rating on the shares, and an $8 price target. Misek emphasized that the shares seem to have little downside, while there are still some ways it could conceivably succeed:

We certainly believe there is a lot of value in the parts, and given they are no longer at risk of bankruptcy, chance of insolvency is low. But they’ve really got to see their services rebound, or see the handsets work.

Asked if Chen was making the right moves, Misek was quick to praise his actions:

Chen is absolutely doing the right thing. At one point they were manufacturing 2 million handsets a month and selling only a couple hundred thousand. That was staggering mis-management. These guys really saved it. It sounds like there are large customers or carriers that are going to make that minimum volume viable. Gross margins were much better than expected. If margins can go higher from here, even if sales continue to decline, I think they can turn it around in the medium to long term.

Asked when the stock might be a Buy, Misek replied,

If we can get a sense for the enterprise side stabilizing, and if there’s any hope for them monetizing their services platform, their unhackable network, if they were able to strike a deal with Google or one of these cloud providers, for a Snowden-proof service, then the stock would be a screaming buy. But the chances for success are low.

Facebook (FB) shares are down 74 cents, over 1%, at $67.32, after the company this afternoon said in an 8-K filing with the Securities & Exchange Commission that it will acquire real-time chat vendor WhatsApp in a cash and stock deal worth $19 billion — $12 billion in Facebook stock, $4 billion in cash, and another $3 billion in restricted-stock grants to WhatsApp employees.

Not a bad payoff for an outfit that reportedly has raised a grand total of $9 million in venture capital money from Sequoia. WhatsApp has 55 employees.

Update: In a follow-up press release, Facebook disclosed the WhatsApp service has 450 million people using it, of whom 70% are active on any given day. The total number of messages on the service is approaching the total volume of all SMS text messages globally, said Facebook.

Said Facebook CEO and founder Mark Zuckerberg, “WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable. I’ve known Jan for a long time and I’m excited to partner with him and his team to make the world more open and connected,” referring to Jan Koum, co-founder of WhatsApp.

For his part, Koum remarked that “WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide.”

“We’re excited and honored to partner with Mark and Facebook as we continue to bring our product to more people around the world.”

Shares of BlackBerry (BBRY) are up 45 cents, over 5%, at $9.01, after the stock got a thumbs up this afternoon from the most unlikely of places, notorious short sellers Citron Research, who argue today that short sellers are misguided in their negativism on the smartphone maker.

“As a short seller, nothing creates a better investment opportunity than a heavily shorted stock based on a flawed thesis,” write the Citron team.

Citron argues short-sellers are still fixated on the company’s defeat in the smartphone market at the hands of Apple (AAPL) and Google (GOOG), but that they need to “get over it.”

What makes the situation more interesting is the incredible amount of unwarranted bearishness coming from Wall Street analysts. Virtually every major Wall Street firm currently has a Hold or Sell on the stock, based on the same substantially flawed analysis.

Instead, the firm argues CEO John Chen, installed in November, has significantly de-risked the balance sheet of the company, an improvement that is not reflected in media coverage of a failing handset maker:

The new strategy — eliminating device inventory risks and refocusing on enterprise software business — has already significantly de-risked Blackberry’s balance sheet. Street estimates of its cash position outlook in the future largely portray the company stabilizing its cash flow within the next few quarters. RBC, for example, sees Blackberry stabilizing its cash position in the 3rd quarter of fiscal 2015, which is three quarters from now. While investors are bombarded on a daily basis with media articles about the struggling handset maker as if the Company was going to fall apart any day, the reality is it has a healthy balance sheet, with ample liquidity to execute its turnaround strategy and make the necessary investments for growth.

The authors lambast various “misperception” examples, including an article by BusinessWeek‘s Joshua Brustein yesterday — “the journalist ridiculed Blackberry’s recent press release of selling 1,000 BB 10 devices and further emphasized the fact that at its peak, Blackberry sold 7,000 phones per hour — and they attack a report by Citigroup‘s Ehud Gelblum‘s December 10 initiationof coverage with a Sell rating, writing “Again, the analyst’s focus here is still on BB10 devices and has yet to manage to realize Blackberry today is an enterprise software play. Why? It’s because the Citi research analyst covers Communication Equipment rather than Enterprise Software.”

The authors write that all these parties are missing “The New BlackBerry,” a software company:

It is going to be an enterprise software company with focus on mobile device management solutions and other potential mobile enterprise software opportunities. The Blackberry today is a fundamentally different company from the old Blackberry that investors were familiar with just a short few months ago before John Chen stepped in.

After lauding BlackBerry’s “BES” device management software, its “BBM” group-messaging application, and its ”QNX“ embedded operating system, the authors argue for the value of the company’s patent holdings:

Analysts have pegged different value on Blackberry’s patent portfolio, ranging from $1 billion to $3 billion. The company was ranked 20th in number of US patent approval for 2013 with 1334 patents approved over the course of the year. Its market capitalization today is a small fraction of virtually every single one of the companies ranked in top 30.

In conclusion, the authors cite this as one of their rare long positions:

Our readers will know that Citron does not undertake a long position in any stock often. And when we do recommend a stock, it is with a reason. (For example, we tweeted about APOL below 20 (after having exposed its major regulatory vulnerability in 2009 when it was over 80), MOVE at 11 in May 2013, WUBA at 24 in October, ATHM below 30 in December. We shared our SOHU valuation analysis writeup (March and August 2012, when the stock was in the 40’s). These positions have stood the test of time respectably. It is Citron’s opinion that Blackberry shorts would be well served to update their research. (Many already have: short interest has fallen from over 32.2% in mid-November, to appx 20.7% as of 12/31/13.) It is Citron’s opinion that it is suicidal to bet against well-capitalized strong management in the enterprise mobile space. It’s just our honest opinion that once conservative valuations against Blackberry’s very viable and highly legitimate enterprise technology businesses are in place, this stock could easily double. The anticipated 2014 IPO’s of much less firmly-rooted competitors will only serve to bolster this thesis. Of course … as always … “Cautious investing to all” … long or short.

As part of a raft of new coverage published this afternoon, Citigroup‘s Ehud Gelblum, who joined the firm in October after several years at Morgan Stanley, assumes coverage of BlackBerry (BBRY) from Jim Suva, replacing Suva’s Neutral rating with a Sell rating, and a $4 price target, down from Suva’s $7 target, writing that “we believe that Blackberry remains challenged as a going concern and continues to be worth more in a breakup scenario, a strategy that current management does not appear to be following.”

(In case you were wondering, Suva is still with Citigroup; his coverage has shifted to exclusively following IT supply chain firms and IT hardware.)

Shares of BlackBerry today closed up 22 cents, or 4%, at $5.97, after being in the red most of the day and spiking late in the session. The company is set to report fiscal Q3 earnings results on December 20th.

Gelblum thinks the prospects of the business on an ongoing basis are dim, given how much the mobile market has shifted. But he also thinks the cost to shut down the business might not be worth it:

We believe that Blackberry remains challenged as a going concern, and continues to be worth more in a breakup scenario, especially with Windows Mobile now looking like it is becoming more established as a 3rd ecosystem behind Android and iOS leaving little room for either Blackberry’s BBOS or BB10. We believe refocusing its business on areas where Blackberry has been losing share as the market has shifted away from it is likely to lead to substantial operating losses going forward as management attempts to put the company on strong footing in a shifting environment. Oddly enough, simply shutting the business is also not likely to add value as the separation costs and purchase commitments that we estimate would be incurred could exceed the company’s cash balance and would likely require substantial renegotiating of agreements with manufacturers. In short, we see no clear-cut strategy, simple or otherwise, to help BBRY out of the strategic box it finds itself in and believe wind-down costs could come close to wiping out a great deal of the current cash balance on which the current valuation is based while the ongoing cash flow from the legacy Services business should dry up quickly. Short of a longshot turnaround and commercialization of the BBM business, we see few options for the company [...] In addition to its $400M CORE restructuring program leaving the company with 7,000 employees, an extrapolation of the current 4,500 plan reduction, suggests another $450M-$500M in various separation costs in the event Blackberry laid off its remaining 7,000 employees. In addition, there may be other separation costs related to hardware, such as the $1.5B with EMS companies, $1B in capex commitments likely related to its Network Operation Centers (NOCs), $400M of other purchase commitments, and over $200M in operating leases, easily putting total costs to shut down the business at around $4B and consuming all of Blackberry’s cash of $2.6B and the additional $1B it recently raised from Fairfax.

Ehud does acknowledge his Sell rating carries the risk that the parts of the business really do have value, including cash and patents, the BBM messaging platform, and the BES server program:

While BBM is mostly non-revenue generating today, there is the risk thateither Blackberry or a potential suitor, successfully monetizes the current 80M person use base and begins to value BBM as a social network akin toInstagram, Facebook, What’s App, etc. While we believe the probability of either success in this venture or of a 3rd party valuing it as such is low, under recent social network valuations, we calculate BBM could be valued as high as $1.6B, or $3/share by itself [...] According to industry press, Blackberry has ~4,000 patents in the US and another 3,300 it has applied for since 2008, for approximately 7,300. Patent valuation could be tricky and according to the carrying value of its IPR on its balance sheet, the book value of Blackberry’s technology is reflected as $464M on its balance sheet, and we estimate its stake in the Rockstar consortium that purchased Nortel’s patents at $779M. We do not believe that BBRY’s patents are worth anywhere near as much as Motorola Mobility’s were – which Google valued at $5.5B at the time of purchase for 17,000 patents, or $324K/patent. Using this valuation method, which again we do not subscribe to, would suggest that BBRY’s 7,300 patent portfolio is worth an estimated $2.4B, or ~$4/share [...] Over the past 2 quarters, Blackberry shipped 19K and 25K BES10 servers, respectively and its Software revenue ticked up slightly in FQ2 to $63M from a trough of $60M in Q1’14. As of the June quarter, Blackberry noted that 60% of its Fortune 500 customers ordered, downloaded, or installed BES10. We caution though that BES10 is potentially pricey and a bit cumbersome.

Shares of 3D Systems (DDD), which were savaged in a missive yesterday by hedgy Whitney Tilson, gets better treatment from the Street this morning, as Bobby Burleson with Canaccord Genuity reiterated a Buy rating on the stock, and raised his price target to $85 from $65, writing that both “EuroMold,” the conference for tooling in Frankfurt this week, and the Consumer Electronics Show in January in Las Vegas, may act as “catalysts” for the shares. “We also believe project Ara, DDD’s manufacturing partnership with Google, could generate significant investor interest in DDD during Mobile World Congress late February.”

And Credit Suisse’s Julian Mitchell is at Euromold this week and today describes some of the new products being shown off by 3D Systems. He reiterates an Outperform rating, and raises his price target to $76 from $65.

3D Systems shares are down 15 cents at $77.87.

Shares of Microsoft (MSFT) are up 51cents, or 1.3%, at $38.82, after the company last filed to raise $8 billion in new debt. Bernstein Research’s Mark Moerdler this morning reflects that there are four possible reasons for the debt raise: to roll over some of its existing $12.6 billion, to ramp up the construction of new data centers for cloud computing, to pursue acquisitions, and/or to increase its buybacks or dividends. Writes Moerdler, “We believe that if Microsoft uses the additional cash to increase their buybacks or dividend then it would be positive for the stock.”

Shares of Pandora Media (P) are up $1.70, or 6%, at $29.97, after the company this morning announced “listener hours” for the month of November rose 18%, year over year, to $1.49 billion, and that its share of total U.S. radio listening rose to 8.4% from 7.2% a year earlier. Active listeners were 72.4 million, up 16%.

Susquehanna Financial Group’s Brian Nowack reiterates a “Positive” rating this morning, and a $36 price target, writing that the increase offsets some of the 1.8 million net users lost in October. “We are encouraged by the fact that Pandora’s user base has returned to growth a little over two months after the iRadio launch […] This return to growth is a further affirmation that the threat of iRadio appears to have been less than some feared.”

Today brings yet another shop picking Apple (AAPL) among computing firms as a way to sidestep the threat of cloud computing. Yesterday, you’ll recall, it was UBS’s Steve Milunovichwho called Apple the “Uncloud Company,” saying investors may move dollars to Apple shares to avoid the negative effects awaiting IBM (IBM) and other enterprise IT firms. This morning, Katy Huberty of Morgan Stanley cut her ratings on Accenture (ACN), NetApp (NTAP), and Teradata (TDC), warning that “our coverage universe missed revenue estimates by more in 3Q13 than in 1H13 and we estimate companies with high cloud revenue risk will miss our original 2013 revenue forecast by 3% on average.”

Shares of BlackBerry (BBRY) are down 10 cents, or 1.6%, at $6.20, following a report this morning by DigiTimes’s Daniel Shen and Steve Shen, who write that the company may be looking to become a strictly software and services business, citing multiple unnamed “industry watchers.” The rationale give is the fact the company has 20 million or so new users for its BBM messaging software on the iOS and Android operating system platforms.

Elsewhere, Reuters’s Laura Noonanreports that BlackBerry’s investor and former board member Prem Watsa, who engineered the recent strategy to raise debt to keep going, told her that John Chen, the newly appointed CEO is “committed for the long haul,” rather than being merely an interim CEO.

Well, that was fast: The ink is barely dry on Thursday’s IPO filing by Twitter, and here comes the first coverage note, from Suntrust Robinson Humphrey‘s Rob Peck, who slaps a Buy on the not-yet-trading shares, and a $50 price target, writing that Twitter is “Pioneering the real time interest graph.”

“It is important for investors to look at Twitter beyond just a 140 character text,” he writes, offering thoughts about $2 billion in “incremental revenue.” He’s modeling $606 million in revenue this year and $1.17 billion next year.

Shares of Apple (AAPL) are up $3.21, or 0.7%, at $486.24, in early trading, following a raft of mostly positive thoughts from the Street, most of it about iPhone demand.

Jefferies & Co.’s Peter Misek raised his rating on the shares to Buy from Hold, and raises his price target to $600 from $425, writing that a trip last week through Asia with suppliers “Indicated a substantial shift in attitudes toward Apple” and that “despite still seeing risk to CQ4 and FY13 revs, we now believe better GMs will allow Apple to skate by until iPhone 6 launches with its 4.8″ screen.” The iPhone 6 “will catalyze a large upgrade cycle,” he thinks.

Believe it or note, Evercore Partners‘s Patrick Wang was also out East (not clear if these fellows coordinated their travel plans). He writes that Apple’s demand picture was the strongest among the electronics trends he snooped on. DRAM production was second, cloud computing, third, programmable chips, fourth, handset production overall was fifth, and way down the list at 8th position were PC and notebook production. Of Apple, he writes, “Robust iPhone builds could drive 4Q upside,” and that “We believe that [sensor maker] InvenSense (INVN) is now ramping at Apple.”

On CNBC this morning, reflecting on Apple, Jim Cramer was heard to remark, “These are significant calls,” referring to the Jefferies and other notes.

“The thought is, we misjudged that Apple could come back. Now, the question is, why isn’t Apple stock through $500? I think there was a big run in Apple because of the tweet heard round the world,” referring to Carl Icahn’s August tweet about buying Apple shares.

“Our meeting with a notebook vendor served up more downbeat data points around second-half demand,” he writes. “The back-to-school season was described by our contact as much worse than expected; therefore, notebook units at this company are expected to fall by approximately 5% sequentially in 3Q:13 and below the low-teens percentage increase for the PC market over the past six years.”

But Wells Fargo‘s David Wong takes a positive view, saying there are “signs of life in notebooks.” Referring to a report by DigiTimes that showed “that computer builds picked up sharply in the month of September,” he adds, “For the September quarter, shipments at Inventec rose 32% sequentially to 5.95 million units. The article mentioned that shipments are expected to drop in October and that the company has a cautious outlook on the overall fourth quarter.”

Shares of BlackBerry (BBRY) are up 32 cents, over 4%, at $8.01, after Reuters’s Nadia Damouni, Soyoung Kim, and Nicola Leskelate Friday wrote that the company “is in talks with Cisco Systems (CSCO), Google (GOOG) and SAP (SAP) about selling them all or parts of itself,” citing multiple unnamed sources.

In response, Jefferies’s Misek reiterated a Hold rating, and an $8 price target, writing that the acquirers could unlock value by splitting up the company into three businesses: handsets, the “BBM” messaging service, and secure network services, the third of which could be “attractive to an enterprise IT player (e.g., Cisco, HPQ, IBM, Oracle, etc.).”

“Given the move to the cloud we believe enterprises will want secure network connectivity, data compression, and a global data center network.”

Shares of VMware (VMW) and EMC (EMC) are both soft this morning after Mizuho Securities USA’s Abhey Lamba reiterated Buy ratings on the two, but wrote that “storage remained more challenging relative to other IT areas” in Q3, though he expects VMware will beat estimates. VMware shares are down 32 cents, or 0.4%, at $80.74, while EMC stock is off 33 cents, or 1.3%, at $25.10.

The Street today continues to ponder the fate of BlackBerry (BBRY) following Monday’s announcement its largest investor, Fairfax Financial Holdings, intends to take the company private at $9 per share.

The stock is off 36 cents, or 4%, at $8.16, reflecting skepticism Fairfax can get the $4.7 billion deal done. A report this morning from Canada’s Globe & Mail stated Fairfax’s Prem Watsa was soliciting pension funds to contribute equity to his bid.

Bernstein Research‘s Pierre Ferragu this morning reiterates an Underperform rating on the stock, and a $7 price target, writing “As more details, or lack thereof, emerge about the Fairfax takeover deal, the chances of the deal going through appear grimmer at most.” Ferragu notes Fairfax doesn’t want to increase its equity stake, already 10%, and so is trying to raise money elsewhere. He finds that “unrealistic.”

It’s more likely the case Fairfax needs to find a strategic buyer for BlackBerry’s “BBM” instant-messaging application, and he doubts that will be achievable, either:

As Fairfax, BlackBerry’s largest shareholder, is not willing to commit any more equity, we think it will be unlikely that enough other investors will be joining the bid that sounds like a last chance rescue attempt for Fairfax’s stake. The Press reported that Canadian pension funds might be interested in providing the additional equity. We understand there could be some distant interest there, given the specific Canadian twist of the operation and the heavy emotional side of the operation for Canada, but we doubt only one or two funds will feel confident investing that much money in such a risky venture. We doubt any financial institution will demonstrate any interest outside of Canada.Can banks be comfortable with a $3bn debt? We doubt financial sponsors will accept such a deal. The only sizeable collateral the firm can bring against debt is its patent portfolio, which we value between $800m and $1.5bn, and whose book value is anyway $1.7bn. In our view, the only way the deal can go through is with an industry participant with an interest in BBM who will want to use offshore money to support the deal in a favorable tax framework. This scenario remains only remotely possible, as the best interest of such a participant would be to wait and see if Fairfax’s tentative deal falls through. A support to Fairfax would be possible only if several industry participants have a keen interest in the venture. Recent press reports suggest this is not the case.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.